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14 Apr 2019  (727 Views) 
Movement for change

Serious economic challenges
Singapore faces serious economic changes. We have reached a stage where it has become very difficult to solve.

The underlying problem is the high cost of living and inadequate wages to meet this cost of living. 

One possible solution is to raise wages and control immigration, so that the jobs are available for local workers. This is the approach adopted in Australia. It has worked quite well.

Although the cost of living is high in Australia, due to high wages, the ordinary people are able to earn enough to meet the cost of living and to raise a family. They have enough spending to keep the domestic economy moving. 

Singapore has high cost of living, but a large part of the high cost goes to property cost and not wages. The workers does not have enough spending power. This caused a large part of the domestic economy, e.g. retail, food and beverage, to be in bad shape.

Can we adopt the Australian approach and raise wages of workers?

It will be difficult. 

A large part of the economy is now the gig economy, e.g. Grab drivers, delivery, etc. The workers are self employed. It will be difficult to raise the wages, as they are paid directly by the customers through market forces.

A viable solution is to reduce the cost of living. This can be achieved as follows:

a) Abolish GST. Singapore can afford to abolish GST and still keep a budget in a small surplus. We only need to include the revenue from land sales into the budget, as is done in Hong Kong. Alternatively, if land sale is not included, then development expenditure, such as building of MRT lines and other development expenditure can be funded directly from land sale or from borrowings.

b) Control rental and property expenses. Change the law to provide better protection for renters on renewal of leases. The adjustment in rental should be based on existing rentals plus market adjustments. Landlords cannot increase the rental arbitrarily. This system is practice in Australia and perhaps many other countries.

c)  The govt can provide retail and commercial spaces at "reasonable rentals" to keep a check on the rentals of private property. This was the practice in the early years. It can be re-introduced.

d) Give the option for the workers to rent a flat from the HDB at subsidized rates, or to buy a shorter lease property, e.g. 10, 20 or 30 years. As the property will eventually have no value at the end of the lease, we should not compel the owners to buy a costly long term lease. Since the purchase of new or resale flats are now subsidized by govt grants, a similar subsidy should be given for the rental of flats..

We need to restore the vigor into our economy. This can be achieved by lowering the cost of living through the measures that I have proposed above.

When the workers have a lower cost of living, they can have more spending power to boost the domestic economy and to raise children. The increase in population through a higher birth rate will produced more jobs.

This will make the domestic economy more vibrant.

Tan Kin Lian

Vote - do you agree to the proposed measures to reduce the cost of living?


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